Oak Park apartment building with a Trader Joe's sells for about $63 million

The pension fund for public employees in Tennessee has acquired Oak Park Place, a 204-unit apartment building in downtown Oak Park completed three years ago.

An affiliate of the Tennessee Consolidated Retirement System bought the 14-story building at 479 N. Harlem Ave. from Whiteco Residential LLC, the Merrillville, Ind.-based company that developed the property, public records show.

A source said the pension fund paid about $63 million, or roughly $309,000 a unit, a high price that reflects the value of a Trader Joe's grocery store on the ground floor.

Whiteco picked a good time to sell, with investors bidding up apartment prices amid a strong leasing market and low interest rates. Rising prices pushed first-year returns, or capitalization rates, on suburban Chicago apartment sales down to 6.3 percent in the second quarter, from a recent peak of 7.4 percent in 2009, according to a report from Appraisal Research Counselors, a Chicago-based consulting firm. Compared to the alternatives, that's still not bad.

Buyers in the suburbs today “are dominated by institutional investors and high-net-worth individuals seeking yields in excess of what can be attained in non-real estate investments,” the report said.

A spokesman for the Tennessee pension fund did not respond to a request for comment, and a spokesman for Cornerstone Real Estate Advisors LLC, the Hartford, Conn.-based firm that advised it on the transaction, declined to comment. A Whiteco representative did not return a phone call.

Oak Park Place includes 35 studio apartments, 106 one-bedroom units, 59 two-bedroom units and four big townhomes, according to a brochure from Moran & Co., the brokerage that handled the sale.

The property was 96.3 percent leased in the second quarter, according to the Appraisal Research report. Rents ranged from $1,235 a month for a studio apartment to $2,865 for the most expensive two-bedroom unit.